In a business environment where frequent and large market fluctuations are the norm, CFOs – given their unique, enterprise-wide vantage point – can be the CEO’s strongest ally against volatility. Finance can bolster organisational performance through critical initiatives such as business performance monitoring and forecasting, robust risk management, and high-levels of controls and transparency. However, the success of these initiatives depends on highly standardised and effective processes. This only adds to the CFO's already hectic list of to-dos: driving quicker and better decision-making; containing costs; driving revenue; finding new opportunities; and maintaining growth. At the Centum Group, Finance, led by its CFO and Head of Strategy, KS Desikan, plays a crucial role in driving growth.
FROM THE EDITOR
Culture eats strategy for breakfast, or so said Peter Drucker, a leading management consultant of the 1980s. An organisation’s culture is made of several things – stories, controls, organisational structure, power equations, rituals, routines and even symbols. The big worry that HR managers and academic researchers have about work from home (WFH) is the consequent damage to this. Culture is a soft and perhaps ambiguous thing and thus hard to articulate – it can only be experienced. It is about how we engage with each other and how work processes function, either through hierarchies or collective work groups. It is the way responsibility is allocated and reporting lines operate. It is also about either a relaxed environment or a more regimented one. Ultimately, culture echoes a company’s personality, providing the basis of its competitive advantage. A visitor to an annual meeting of the distributers of a direct sales or multilevel marketing company, like Amway or Tupperware, would be surprised or even shocked at the passion that is expressed. She might wonder how normal people can behave with such unusual levels of energy and passion. It is like the fans in a rugby game, only ten times more fervent.
Today’s CFO is fundamentally different from the CFO of yesterday. The ‘older’ set of Finance tasks remain critical but are now viewed as ‘table stakes’ by CEOs. Modern CFOs are expected to drive the organisation’s direction using their knowledge and experience. For that, they need to demonstrate leadership, a good understanding of business models, strong communication skills, business and technology savvy, process discipline and a strategic bent of mind. Kiran Annambhotla, the Finance Director of Danone India, believes that a successful CFO is one who has a good balance of technical, business and soft skills: a strong grounding in Finance, deep understanding of business models, the ability to drive a company’s culture, a compliance mindset and high levels of integrity and transparency.
With the Intergovernmental Panel on Climate Change (IPCC) recently signalling ‘a code red for humanity,’ there is a renewed focus on environmental sustainability across the globe. India, the world’s third-biggest greenhouse-gas emitter and home to 5 of the 10 most polluted cities, will need to tackle the issue on a war-footing. Many believe the transition to electric vehicles (EVs) will be a crucial part of the policy mix and, indeed, India has set ambitious targets for itself: at least 30% overall EV penetration by 2030, with some projections going even beyond that. However, on current trends, such goals will be only partially met.
With government-opposition relations touching new levels of acrimony, Parliament’s Monsoon Session ended two days early. Despite the rancour, 20 bills found passage during the session – many of them through a voice-vote, with little or no debate or discussion. These included amendments to the Deposit Insurance and Credit Guarantee, LLP, Taxation, Factoring, IBC and General Insurance laws, a Tribunal Reforms bill, and a new law prohibiting strikes and lockouts in ‘essential defence services.’ Outside of Parliament, the Finance Minister announced a new Rs 6 trillion asset-monetisation plan that aims to lease out toll roads, ports and airports, transmission lines, renewable-energy assets, gas and oil pipelines, railway stations and trains, 160 coal-mining projects and stadiums. However, India’s prior experience with asset monetisation and its erratic track-record on disinvestment suggest that this ambitious plan may be difficult to pull off.
Recent amendments to India’s e-Commerce rules – which ban flash sales, raise the compliance requirements, and make platforms liable for failures by registered sellers to deliver the promised goods – are a more stringent version of the changes made in 2020. The government claims that this will level the playing field, benefit consumers and favour small and medium-sized companies. Given the wide-ranging nature of the proposed changes, how will these amendments impact e-Commerce players, including foreign/Indian/small and medium-sized companies? Will consumers actually benefit and to what degree? IMA looked at the main proposals that are likely to impact this growing channel. This paper provides a perspective.
Every three months, for over two decades, IMA has run its Business Confidence and Performance Index (BCPI) survey among CEOs and CFOs. The headline index – a composite of expectations around the macro-economy, business performance and capex spends[ Over 200 companies responded to the July survey. The headline index weighs the past (Q1, or Apr-Jun) and expected future (Q2, Jul-Sep) on a 40:60 basis. It gives a 25% weightage to the macro-economic outlook, 60% to business performance and 15% to capex (actual/planned).] – is strongly correlated with the GDP data, which follows with a lag. This makes the BCPI a good lead indicator of growth. After dropping sharply in April, the July (Q2FY22) results signal a strong pick-up in sentiment, although Covid’s second wave has pushed back the ‘return to normal’ for many companies. This paper explains.
2020 was a Black Swan year for the world economy but for the pharmaceuticals sector, it brought stellar growth and intense deal-making. Globally, pharma mergers and acquisitions (M&A) and private equity (PE) investments accelerated in the second half of 2020, with the 5 biggest ‘mega deals’ adding up to a whopping USD 97 billion. According to data from PwC, a consultancy, healthcare M&A transactions jumped 25% yoy in H2 and 14% for 2020 as a whole, led by deals involving Asia. The Indian pharmaceutical industry has mirrored these global trends, thanks to India’s unique position as both a major consumer and producer/exporter. In fact, for over a decade, inorganic growth has been a key growth driver for the sector and a robust source of capital, productivity and innovation. Our research indicates that these trends are likely to only accelerate in the months and years ahead.
As we in India, as in other parts of the world, wait nervously for the next wave of the Covid-19 pandemic to strike, we must start to acknowledge that the virus is here to stay. Consequently, as Professor Prabhat Jha explained at a recent IMA Forum session, the focus of governments across the world must shift towards establishing a long-term adult vaccination programme. Covid-19 has progressed from being a pandemic into something that is endemic and will remain so for several years.
Bambawale, Former Indian Ambassador and Distinguished Professor at Symbiosis
Following the withdrawal of American troops, Afghanistan’s political landscape has undergone a dramatic shift. The Taliban advanced into Kabul, ousting the Ashraf Ghani government and taking control of almost the entire country. Several questions come up at this juncture: What does this mean for Afghanistan? How will this affect India and the rest of Asia? What does the future look like, geopolitically and economically, for the sub-continent? To receive an informed perspective on these issues, we recently hosted Gautam Bambawale, who worked in the Indian Foreign Service for 34 years and has been India’s Ambassador to several countries, including Bhutan, Pakistan and China.
Martin, Managing Director, IMA Asia
Globally and in Asia, economic growth is reviving and stock markets are surging. 55% of S&P 500 shares have a net ‘buy’ recommendation, while in Europe, the gap between ‘buy’ and ‘sell calls is at a 12-year high. Yet there are also major challenges ahead, most obviously the Delta variant of Covid-19, which has triggered a third global wave. Rising economic nationalism, heightened geopolitical risks and major supply-chain disruptions are key issues. Together, these factors are spurring a new bout of reshoring and near-shoring and causing organisations to restructure. However, globalisation remains a potent force, driven by the logic of trade and unfettered capital flows. At a recent webinar of the India CEO Forum, Richard Martin, Managing Director of IMA Asia, took stock of Asia’s medium-term growth prospects.
National Managing Partner – Tax, Grant Thornton India
Globally, taxation is transforming, with governments becoming more protectionist. Businesses are seeing rising challenges around transfer pricing (TP) on account of both, treaty-related and operational issues. Domestically, the government’s intent to reduce tax rates is coming up against the need to raise tax revenues. Finance heads and tax professionals have to deal with a raft of new measures, including new documentation requirements, audits by tax authorities and new tax and TP-related legislation. The other key challenges include ensuring tax compliance and minimising tax risks/disputes in a faceless regime. At a recent India CFO Forum webinar, Vikas Vasal, National Managing Partner – Tax at Grant Thornton India, provided an analysis of recent developments in the global and domestic tax regimes, the consequent business impact, and practical guidance on preparing for imminent changes.
Chaudhuri, Foreign Editor, Hindustan Times
To a degree, the past 18-odd pandemic-dominated months have been geopolitically static as far as the on-ground situation goes. At the same time, however, there have been major developments in the policy realm that have put India at the cornerstone of a new world order – one centred around the Indo-Pacific. Future-ready technologies, climate change and disruptive and disrupted supply chains will drive this emerging world order. The implications for India – in terms of its position in the Quad and its relations with its neighbours, most importantly China – are significant. At a recent CEO Forum webinar, Pramit Pal Chaudhuri, Foreign Editor at the Hindustan Times, provided a perspective on these and other issues.
John Chambers, CISCO’s ex-CEO, famously cautioned in 2015 that, ‘At least 40% of all businesses will die in the next 10 years... if they don’t figure out how to change their entire company to accommodate new technologies.’ This stark warning brings to the fore the crucial role technology plays in determining whether a company will survive and thrive in the years ahead. Having a technology transformation agenda in place is now a fundamental business requirement, particularly now that Covid-19 has flipped the script on everything to do with how we work. ‘Transformation’ has long been a buzzword in the business world but what does it mean in practical terms? At a recent India CFO Forum session, hosted in partnership with Automation Anywhere, Lalit Malik, Executive Director & CFO at Torrent Power, Poorav Sheth, Group Chief Digital Officer at Godrej and Boyce, and Sumeet Pathak, Digital Workforce Evangelist – IMEA at Automation Anywhere, shared insights on how Chief Information Officers (CIOs) and CFOs can together drive successful technology transformations.
Co-founder and CEO, iD Fresh
The sheer stature and success of Bengaluru-based ready-to-cook start-up iD Fresh Foods bely its humble beginnings. Founded in 2005, when India’s packaged-fresh-food market was in its nascency, the bootstrapped company started out with an investment of Rs 50,000, a small 50 sq ft kitchen and a second-hand scooter for making deliveries. Sixteen years later, iD Fresh has revenues of close to Rs 300 crores from more than 45 cities in India, the US and the UAE, and has raised funds from investors like Helion Ventures and Premji Invest. How did iD Fresh emerge as a leader in this hyper-competitive market? PC Musthafa, the company’s co-founder and CEO, who dropped out of school to help his family through a financial crisis, shared his learnings on building a brand centred on quality, innovation and technology.